The NSW economy grew by 2.9 per cent in 2016-17, well above its trend rate of 2½ per cent. In 2017 employment expanded solidly, workforce participation lifted, and the unemployment rate fell to 4.6 per cent—the lowest since 2008.

Economic performance and outlook table (a)

 

2016-17

2017-18

2018-19

2019-20

2020-21

 

Outcome

Forecast

Projection

Real state final demand

3.6

-

-

Real gross state product

2.9

3

Employment

1.0

Unemployment rate (b)

5.0

Sydney Consumer Price Index (c)

2.0

Wage price index

2.1

2

3

Nominal gross state product

6.4

Population (d)

1.6

1.6

1.4

1.4

1.4

(a) Per cent change, year average, unless otherwise indicated.
(b) Year average, per cent.
(c) 2016-17 to 2020-21 include ¼ percentage point contribution from tobacco excise increases.
(d) Per cent change through the year to 30 June. Forecasts are rounded to the nearest 0.1 percentage points.
Source: ABS 5206.0, 5220.0, 6202.0, 6401.0, 6345.0 and NSW Treasury
 

The NSW economy outperformed the nation in 2016-17, with gross state product growing well above-trend at 2.9 per cent. Over the last year investment, both public and private, has been the cornerstone of economic growth, contributing nearly double its historical average.

The continuing ramp-up in state led infrastructure projects, including NorthConnex, Sydney Metro and WestConnex, has seen engineering construction expand significantly. Housing construction has also grown strongly and is expected to remain at high levels as the record investment pipeline continues to support activity for at least the next two years. Businesses are also poised to push construction activity higher, in response to above-average capacity utilisation and strong business conditions, with broad based strength in non-residential building approvals.

Labour market conditions in New South Wales are strong. Recently, full-time employment growth has been significant and workforce participation has increased. The unemployment rate has fallen to 4.6 per cent, the lowest among the states. Despite this strength, wages growth is expected to remain constrained due to ongoing spare labour capacity nationally and strong inward migration.

The outlook for inflation has been revised down since the Budget reflecting weaker than forecast price and wage outcomes. It also incorporates a larger than anticipated reduction in inflation due to the re-weighting of the standard household basket, as measured by the Australian Bureau of Statistics 2016 Household Expenditure Survey.

Over the next two years, supportive conditions are expected to foster above-trend economic growth for New South Wales. This outlook is underpinned by strengthening national and global economies, low interest rates, a lower Australian dollar, strong demand from Asia, above-trend population growth and a historically large pipeline of infrastructure and residential construction. 

NSW is expected to continue to outperform the national economy over the next year.

A more detailed economic outlook can be found in the NSW 2017-18 Half-Yearly Review.